IGST on Ocean Freight Refund – Interest Payable

Case Details: Paradeep Phosphates Ltd. vs. Additional Commissioner Goods and Services Tax [2026] 182 taxmann.com 587 (Orissa)

Judiciary and Counsel Details

Harish Tandon, CJ. & Murahari Sri Raman, J.
Jagabandhu Sahoo, Sr. Adv., Ronit Ghosh, Subhajeet Sahu, Urmila Sahoo, Romeet Panigrahi & Ms Kajal Sahoo, Advs. for the Petitioner.
Sujan Kumar Roy Choudhury, Senior Standing Counsel for the Opposite Parties.

Facts of the Case

The petitioner, being a manufacturer of fertiliser, imported raw materials and discharged customs duty on the assessable value of such imports. It paid IGST under the reverse charge mechanism on ocean freight. The petitioner challenged the levy of IGST on ocean freight. However, the Department declined to grant interest on such a refund, contending that the refund was processed within the statutory time under Section 54 of the CGST Act and that the statute did not expressly provide for interest in such circumstances. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the IGST collected on ocean freight was without authority of law, as such a levy had been declared unconstitutional by the Supreme Court in Mohit Minerals (P.) Ltd. The Court held that where a tax is collected pursuant to a levy that is subsequently found to be illegal and unconstitutional, the petitioner is entitled to interest on the refunded amount. The refund not arose from any misinterpretation by a quasi-judicial authority, and therefore, the Department’s denial of interest was unsustainable. It was further held that the interest was payable under Section 56 read with Section 54 of the CGST Act and the Odisha GST Act from the date of payment of IGST on ocean freight until the date of actual refund.

List of Cases Referred to

Mohit Minerals (P.) Ltd. v. Union of India [2020] 113 taxmann.com 436 (Gujarat)/[2020] 78 GST 519 (Gujarat)/[2020] 33 GSTL 321 (Gujarat) (para 2.3)
Union of India v. Mohit Minerals (P.) Ltd. [2022] 138 taxmann.com 331 (SC)/[2022] 61 GSTL 257 (SC)/[2022] 92 GST 101 (SC) (para 2.4)
Commissioner, Commercial and Sales Taxes v. Orient Paper Mills Ltd. (2004) 2 SCR 451 (para 6.10)
Ujjam Bai v. State of Uttar Pradesh (1963) 1 SCR 778 (para 6.12)
Union of India v. Hamdard (Waqf) Laboratories [2016] 67 taxmann.com 125 (SC)/[2016] 54 GST 341 (SC)/[2016] 333 ELT 193 (SC)/[2016] 37 GSTR 413 (SC) (para 6.15)
West India Continental Oils Fats (P.) Ltd. v. Union of India [2025] 179 taxmann.com 603 (Bombay)/[2026] 104 GSTL 208 (Bombay) (para 6.15)
ADI Enterprises v. Union of India [2022] 143 taxmann.com 47 (Gujarat)/[2022] 94 GST 866 (Gujarat)/[2022] 64 GSTL 392 (Gujarat) (para 6.16)
ETC Agro Processing (India) (P.) Ltd. v. Union of India [2023] 150 taxmann.com 376 (Gujarat)/[2023] 98 GST 531 (Gujarat)/[2023] 75 GSTL 32 (Gujarat) (para 6.16)
Jupiter Comtex (P.) Ltd. v. Union of India [2024] 160 taxmann.com 116 (Gujarat)/[2024] 104 GST 167 (Gujarat)/[2024] 86 GSTL 95 (Gujarat) (para 6.17)
Mohd. Ekram Khan & Sons v. CTT 2004 taxmann.com 1806 (SC) (para 6.20)
Vijaya Vasava Motors v. Asstt. Commissioner (2009) 19 VST 322 (AP) (para 6.20)
Himmatlal Harilal Metha v. State of Madhya Pradesh, (1954) 1 SCC 405 (para 6.21)
South Eastern Coalfields Ltd. v. State of M.P. (2003) 8 SCC 648 (para 6.5)
Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC)/[2024] 301 Taxman 238 (SC)/[2024] 469 ITR 46 (SC) (para 6.6)
Sandhu Overseas v. State of Haryana (2011) 45 VST 244 (P&H) (para 6.7)
Dr Poornima Advani v. Government of NCT (2025) 2 SCR 1178 (para 6.8).